On their own

The outgoing prime minister has been at the receiving end of many a barb, but this one circulating around the internet last year took the rabdi. It went, “A new Kamasutra position has been recently added. It is called ‘Manmohan’. You get on top and then you do nothing.” 

Enough ink has been used up to detail the shortcomings of the UPA-II government but the fact remains that those affected must pick up the pieces and move on. And nowhere has the pain been more acutely felt than by small manufacturing units around the country.Manufacturing continues to be the economy’s Achilles’ heel and an indifferent government pushing the economy into a tailspin has only exacerbated the situation. 

The SME sector in India accounts for the biggest chunk of organised sector employment but being a small manufacturer in the country seems like a thankless task, given the harassment that many of them endure. The pain points are just not about infrastructure constraints such as power shortages or poor quality roads, they go a lot deeper. During good times, those on the regulatory beat wring out their undue share and in bad times, if at all they get enough orders, most buyers delay their payments. The financing cost incurred due to the latter not only corrodes their meagre profits but also ends up leaving many manufacturers indebted. 

The extent of the current slowdown in many of the industrial clusters can be gauged by the fact that many small entrepreneurs have not been able to fully utilise the credit limits sanctioned by their banks. There just aren’t enough orders flowing through.

That is why a shake-out seems inevitable if this lean patch persists. In fact, many relatively strong SMEs are looking forward to one. The thinking being that even if the market continues to be stagnant, fewer players mean more business for the survivors.

Unlike last year, when businessmen we met for the State of the economy special issue had become indifferent to the vacuum in governance, this time around the situation is grim and they are expecting nothing less than a miracle from the next government. Read this issue here.